The Ministry of Corporate Affairs (MCA) has asked the Communications Ministry to reconsider the grant of licence to Mumbai-based Loop Telecom.

As per MCA investigations, while the Essar group does not directly owns stake in the firm, the indirect route points to major stake ownership of the group through subsidiaries. The MCA feels that this is against the rules and regulations of the land which do not allow a single firm or sister companies to own more than 10 percent in two licence holding companies in the same circle.

The share holding pattern of Loop involves Santa Trading owning it which also owns BPL Mobile Communications and BPL Communications. The Essar Group has 9.99 % stake in Santa Trading.

But the main issue is that Santa Trading is owned by Kiran Khaitan, sister of Ruia brothers who in turn own the Essar group.

“There were significant links and benefits arising to STPL from the financial transactions, direct and indirect, with the Essar Group,” said MCA.

As per MCA, Loop is 24% owned by BPL Communications, 51% by BPL Mobile Communications and 24% by Capital Global, Mauritius. BPL Communications has a 73.99% stake in BPL Mobile Communications while Santa Trading has about 86% stake in BPL Communications. Essar has 9.99% stake in BPL Mobile Communications.

MCA also said that the Essar group has invested Rs 1,592 crore in its unsecured, non-convertible debentures in Santa Trading.

“It would appear that through the funding of STPL by Essar Group, equity has been provided to BPL Communications, which is 48% owner of Loop Telecom. DoT may examine their policy and regulations for eligibility for grant of letter of Intent (LOI) to Loop Telecom for grant of UAS licence,” said MCA.